The output price indices measure change in the prices of goods produced by UK manufacturers (these are often called 'factory gate prices').

The input price indices measure change in the prices of materials and fuels bought by UK manufacturers for processing. These are not limited to just those materials used in the final product, but also include what is required by the company in its normal day to day running.

Imported Price Indices (IPIs) are a series of economic indicators that measure change in the prices of goods and raw materials imported into the UK. IPIs are a key component of input price indices.

Exported Price Indices (EPIs) are a series of economic indicators that measure change in the prices of goods manufactured in the UK but destined for export markets.

Output Prices: Summary

In the year to February 2012, movements in output prices for UK manufactured products were as follows:

The output price index for home sales of manufactured products rose 4.1 per cent, compared with a rise of 4.0 per cent last month.

The output price index excluding excise duty rose 4.0 per cent, unchanged from last month. The last time the annual rate was lower was in November 2010, when the index rose 3.9 per cent.

Between January and February:

The output price index for home sales of manufactured products rose 0.6 per cent. This is the largest monthly increase since April 2011, when the index rose 1.1 per cent. There were price increases in tobacco & alcohol, other manufactured products, petroleum products and chemicals & pharmaceutical products.

The output price index excluding food, beverages, tobacco & petroleum rose 0.5 per cent, compared with a rise of 0.3 per cent last month. This is the largest monthly increase since April 2011, when the index rose 0.8 per cent.

Table source: Office for National Statistics

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Input Prices: Summary

In the year to February 2012, movements in input prices1,2 of materials and fuels purchased by the UK manufacturing industry were as follows:

The total input price index rose 7.3 per cent, compared with a rise of 6.6 per cent last month.

The input price index for the manufacturing industry excluding the food, beverages tobacco & petroleum industries rose 5.4 per cent, compared with a rise of 5.5 per cent last month. This is the lowest annual rate since March 2010, when the index rose 4.0 per cent.

Contribution to 1 month percentage change in total (2.1%)

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Output Prices: Summary Of Statistics

The overall output price index rose 4.1 per cent in the year to February 2012, compared with a rise of 4.0 per cent in the year to January 2012. The output price index rose 0.6 per cent between January and February, compared with a rise of 0.4 per cent between December 2011 and January 2012. The monthly rise in the output index mainly reflected price increases in tobacco & alcohol products, other manufactured products, petroleum products and chemicals & pharmaceutical products.

Tobacco & alcohol (inc duty) product prices rose 1.8 per cent between January and February and rose 8.8 per cent in the year to February. This is the highest annual rate since December 2008, when the index rose 8.9 per cent. The increase of 1.8 per cent on the month to February was mainly due to a 3.1 per cent increase in the price of beer and a 2.5 per cent increase in the price of cider & other fruit wines. This in the largest monthly rise since April 2011, when the index rose by 2.9 per cent.

Other manufactured product prices rose 0.8 per cent between January and February and rose 3.7 per cent in the year to February. This is the highest annual rate since April 2009, when the index rose 4.0 per cent. The increase of 0.8 per cent on the month to February was mainly due to a 7.4 per cent increase in the price of other manufactured goods not elsewhere classified and a 4.5 per cent increase in the price of jewellery, bijouterie & related articles. This is the largest monthly rise since December 2009, when the index also rose by 0.8 per cent. The last time the monthly increase was larger was in January 2008, when the index rose 1.0 per cent.

Petroleum product prices rose 0.8 per cent between January and February and rose 6.1 per cent in the year to February. This is the lowest annual rate since October 2009, when the index fell 3.1 per cent. The monthly rise was mainly due to a 1.2 per cent increase in the price of unleaded petrol and a 0.6 per cent increase in the price of diesel & gas oil.

Chemicals & pharmaceutical product prices rose 1.0 per cent between January and February and rose 3.0 per cent in the year to February. The monthly rise was mainly due to an increase of 4.4 per cent in the price of plastics in primary forms, a 2.4 per cent increase in the price of other organic basic chemicals and 1.4 per cent increase in the price of paints, varnishes & similar coatings, printing ink & mastics. This is the largest monthly increase since April 2011, when the index rose 1.9 per cent.

Apart from paper & printing products all other product groups recorded price increases in the month of February.

Output price index excluding food, beverages, tobacco & petroleum

The output price index for manufactured products excluding food, beverages, tobacco & petroleum rose 3.0 per cent in the year to February, compared with a rise of 2.4 per cent in the year to January. This index is not affected by changes in excise duty. The index rose 0.5 per cent between January and February 2012 compared with no movement between January and February 2011. This is the largest monthly increase since April 2011, when the index rose 0.8 per cent.

Output price index excluding excise duty

This index rose 4.0 per cent in the year to February, unchanged from the January figure. The last time the annual rate was lower was in November 2010, when the index rose 3.9 per cent. Looking at the monthly index movements, the index rose 0.5 per cent between January and February 2012, compared with a rise of 0.5 per cent between January and February 2011.

Input Prices: Summary Of Statistics

The overall input index rose 7.3 per cent in the year to February 2012, compared with a rise of 6.6 per cent in the year to January 2012.

The input index for all manufacturing rose 2.1 per cent between January and February 2012, compared with a rise of 1.4 per cent between January and February 2011. The monthly rise in the input index mainly reflecting price increases in crude oil, home produced food, fuels (inc CCL) and imported metals.

Crude oil prices rose 5.8 per cent between January and February and rose 16.0 per cent in the year to February. This is the largest monthly increase since September 2011, when the index rose 6.4 per cent.

Home produced food product prices rose 2.1 per cent between January and February and rose 3.1 per cent in the year to February. The monthly increase of 2.1 per cent is the largest monthly rise since April 2011, when the index also rose 2.1 per cent. The last time the monthly increase was larger was in March 2011, when the index rose 2.5 per cent. The monthly rise was due to widespread increases across a broad range of products, most notably a 13.9 per cent rise in the price of home produced fresh vegetables and a 3.2 per cent rise in the price of home produced cereals.

Fuel (inc CCL) prices rose 1.6 per cent between January and February and rose 11.5 per cent in the year to February. The monthly rise was due to an increase of 3.6 per cent in the price of gas.

Imported metal prices rose 1.8 per cent between January and February but fell by 3.1 per cent in the year to February. This is the largest annual fall in the index since August 2009, when the index fell 5.9 per cent. The monthly rise was due to widespread increases across a broad range of products, most notably a 4.8 per cent rise in the price of non EU imports of precious metals, a 3.6 per cent rise in the price of EU imports of Aluminum and a 2.0 per cent rise in the price of EU imports of copper. This in the largest monthly rise since February 2011, when the index rose by 3.2 per cent.

Apart from imported food and other home produced materials all other product groups recorded price decreases in the month of February.

The index for materials and fuels purchased by manufacturing industry excluding the food, beverages, tobacco & petroleum industries rose 0.8 per cent in seasonally adjusted terms between January and February. The unadjusted index rose 5.4 per cent in the year to February, compared with a rise of 5.5 per cent in the year to Janaury. This is the lowest annual rate since March 2010, when the index rose 4.0 per cent.

Output Prices: Records

All manufactured products

Annual rate 4.1%, up from 4.0% last month. Last higher in December 2011 (4.8%). Monthly rate 0.6% up from 0.4% last month. Last higher in April 2011 (1.1%).

Excluding food, beverages, tobacco & petroleum

Annual rate 3.0%, up from 2.4% last month. Also 3.0% in December 2011. Last higher in November 2011 (3.1%). Monthly rate 0.5% up from 0.3% last month. Last higher in April 2011 (0.8%).

All manufactured products excluding duty

Annual rate 4.0%, unchanged from last month. Last lower in November 2010 (3.9%). Monthly rate 0.5% up from 0.3% last month. Last higher in April 2011 (0.9%).

Food products

Annual rate 4.5%, down from 5.5% last month. Last lower in December 2010 (3.6%). Monthly rate 0.1% unchanged from the last two months. Last lower in September 2010 (-0.2%).

Tobacco & alcohol (inc duty)

Annual rate 8.8%, up from 7.4% last month. Last higher in December 2008 (8.9%). Monthly rate 1.8% up from 1.2% last month. Last higher in April 2011 (2.9%).

Clothing, textiles & leather

Annual rate 5.1%, up from 5.0% last month. Last higher in December 2011 (5.7%). Monthly rate 0.4% down from 0.5% last month. Last lower in December 2011 (0.2%).

Paper & printing

Annual rate 2.3%, down from 3.1% last month. Also 2.3% in May 2010. Last lower in April 2010 (1.9%). Monthly rate -0.4% down from 0.3% last month. Last lower in August 2009 (-0.5%).

Petroleum products

Annual rate 6.1%, down from 7.3% last month. Last lower in October 2009 (-3.1%). Monthly rate 0.8% down from 0.9% last month. Last lower in December 2011 (-1.4%).

Chemical & pharmaceutical products

Annual rate 3.0%, up from 0.9% last month. Last higher in December 2011 (3.4%). Monthly rate 1.0% up from -0.2% last month. Last higher in April 2011 (1.9%).

Metal, machinery & equipment nec

Annual rate 3.0%, down from 3.1% last month. Last lower in April 2010 (2.2%). Monthly rate 0.3%, up from -0.2% last month. Also 0.3% in both October and November 2011. Last higher in July 2011 (0.4%).

Computer, electrical & optical equipment

Annual rate 0.3%, up from 0.2% last month. Last higher in December 2011 (0.5%). Monthly rate 0.1% down from 0.4% last month. Also 0.1% in December 2011. Last lower in November 2011 (-0.1%).

Transport equipment

Annual rate 1.4%, up from 1.3% last month. Last higher in September 2011 (1.8%). Monthly rate 0.2% up from 0.0% last month. Last higher in September 2011 (0.3%).

Other manufactured products

Annual rate 3.7%, up from 3.3% last month. Last higher in April 2009 (4.0%). Monthly rate 0.8% up from 0.3% last month. Also 0.8% in December 2009. Last higher in January 2008 (1.0%).

Input Prices: Records

Materials & fuels purchased

Annual rate 7.3%, up from 6.6% last month. Last higher in December 2011 (8.9%). Monthly rate 2.1% up from 0.1% last month. Also 2.1% in September 2011. Last higher in April 2011 (2.8%).

Excluding food, beverages, tobacco & petroleum industries

Annual rate 5.4%, down from 5.5% last month. Last lower in March 2010 (4.0%). Monthly rate (seasonally adjusted) 0.8% up from -0.1% last month. Also 0.8% in July 2011. Last higher in June 2011 (0.9%).

Fuel including climate change levy

Annual rate 11.5%, up from 8.7% last month. Last higher in November 2011 (13.1%). Monthly rate 1.6% up from -1.3% last month. Also 1.6% in December 2011. Last higher in November 2011 (3.3%).

Crude oil

Annual rate 16.0%, up from 13.9% last month. Last higher in December 2011 (20.2%). Monthly rate 5.8% up from 0.5% last month. Last higher in September 2011 (6.4%).

Home food materials

Annual rate 3.1%, up from 1.7% last month. Last higher in November 2011 (6.3%). Monthly rate 2.1% up from -0.9% last month. Also 2.1% in April 2011. Last higher in March 2011 (2.5%).

Imported food materials

Annual rate 3.8%, down from 5.2% last month. Last lower in September 2010 (3.1%). Monthly rate 0.6% down from 0.8% last month. Last lower in December 2011 (0.1%).

Other home-produced materials

Annual rate 5.3%, up from 3.3% last month. Also 5.3% in December 2011. Last higher in October 2011 (5.7%). Monthly rate 0.1% down from 1.0% last month. Last lower in November 2011 (-0.6%).

Imported metals

Annual rate -3.1%, down from -1.8% last month. Last lower in August 2009 (-5.9%). Monthly rate 1.8% up from 1.0% last month. Last higher in February 2011 (3.2%).

Imported chemicals

Annual rate 2.8%, down from 3.8% last month. Last lower in February 2010 (2.5%). Monthly rate -0.2% down from -0.1% last month. Last lower in December 2011 (-1.2%).

Imported parts & equipment

Annual rate 4.3%, up from 3.9% last month. Last higher in November 2011 (6.1%). Monthly rate -0.1% down from 0.4% last month. Last lower in December 2011 (-0.5%).

Other imported materials

Annual rate 6.8%, down from 7.1% last month. Last lower in April 2010 (4.5%). Monthly rate -0.3% unchanged from last month. Last higher in October 2011 (0.2%).

Revisions

For this bulletin Reference Tables 8R and 9R (219 Kb Excel sheet)
highlight revisions to movements in price indices previously published in last month’s Statistical Bulletin. These are mainly caused by changes to the most recent estimates, as more price quotes are received, and revisions to seasonal adjustment factors, which are re-estimated every month.

Revisions between first publication and estimates twelve months later

Percentages

Value in last period

Revisions between first publication and estimates twelve months later

Average over the last 5 years

Average over the last 5 years without regard to sign (average absolute revision)

Total output: 12 months

4.1

-0.11

0.18

Total output: 1 month

0.6

0.03

0.10

Total input: 12 months

7.3

0.41*

0.71*

Total input: 1 month

2.1

0.15*

0.46*

Table source: Office for National Statistics

Table notes:

* Statistically significant.

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Revisions to data provide one indication of the reliability of key indicators. The above table shows summary information on the size and direction of the revisions which have been made to the data covering a five year period. A statistical test has been applied to the average revision to find out if it is statistically significantly different from zero. An asterisk (*) shows that the test is significant.

The table presents a summary of the differences between the first estimates published between February 2006 and Janaury 2011 and the estimates published 12 months later. These numbers include the effect of the reclassification onto SIC 2007.

Spreadsheets giving revisions triangles of estimates for all months from January 1998 through to January 2012 and the calculations behind the averages in the table are available in the reference table area of the ONS website:

Producer Prices has implemented the change to the Standard Industrial Classification 2007 (SIC 2007). The most significant change to PPI output prices involves the reclassification of ‘recovered secondary raw materials’ and ‘publishing’. These are no longer classified in the manufacturing sector, but are classified under services. In addition to this, a new SIC division, ‘repair, installation and maintenance of machinery and equipment’ has been created. Under SIC 2003 these activities were classified within the output of manufacturing, but as part of the specific industries where this activity took place.

Fundamental changes have been made to the classification of the PPI Trade surveys, Import Price indices (IPI) and Export Price Indices (EPI). As part of the reclassification project the classification of these trade surveys have become compliant with Eurostat’s Short Term Statistics Regulation. The collection of IPI and EPI will now be on an SIC basis, a switch from the Standard International Trade Classification (SITC) and Combined Nomenclature (CN) previously used. PPI input prices are heavily dependant on IPI.

Any comments about this work and its impact on PPI please contact Producer Price Index Operations on +44 (0)1633 456628 or email ppi@ons.gsi.gov.uk

Relevance To Users

Index numbers shown in the main text of this bulletin are on a net sector basis. The index for any sector relates only to transactions between that sector and other sectors, sales and purchases within sectors are excluded. However, the more detailed figures shown in reference tables 4 and 6 (219 Kb Excel sheet)
are on a gross basis; that is, intra industry sales and purchases are included in each of these indices.

Indices relate to average prices for a month. The full effect of a price change occurring part way through any month will only be reflected in the following month’s index.

All index numbers exclude VAT. Excise duty (on cigarettes, manufactured tobacco, alcoholic liquor and petroleum products) are included, except where labeled otherwise. Since PPIs exclude VAT, they are not affected by the increase in the standard rate of VAT to 20 per cent from 4 January 2011.

The detailed input indices of prices of materials and fuels purchased by industry (Reference Table 6) (219 Kb Excel sheet)
do not include the climate change levy (CCL). This is because each industry can, in practice, pay its own rate for the various forms of energy, depending on the various negotiated discounts and exemptions that apply.

Common Pitfalls In Interpreting Series

Expectations of accuracy and reliability in sample surveys are often too high. Revisions and sampling variability are inevitable consequences of the trade off between timeliness, accuracy and the burden on respondents. Details of sampling variability are included elsewhere in this bulletin.

Very few statistical revisions arise as a result of ‘errors’ in the popular sense of the word. All estimates, by definition, are subject to statistical ‘error’ but, in this context, the word refers to the uncertainty in any process or calculation that uses sampling, estimation or modeling. Most revisions reflect either the adoption of new statistical techniques or the incorporation of new information which allows the statistical error of previous estimates to be reduced. Only rarely are there avoidable ‘errors’ such as human or system failures, and such mistakes are made quite clear when they are discovered and corrected.

Accuracy

Figures for the latest two months are provisional and the latest five months are subject to revisions in light of (a) late and revised respondent data and (b), for the seasonally adjusted series, revisions to seasonal adjustment factors which are re-estimated every month. A routine seasonal adjustment review is normally conducted in the autumn annually. There are no planned methodological changes in the next 12 months.

Publication Policy

The complete run of data in the tables of this bulletin are also available to view and download in other electronic formats free of charge using the Office for National Statistics Datasets and Reference Table service (if you want the data associated with this bulletin click into Download data in this release option). Users can download the complete release in a choice of zipped formats or view and download their own selections of individual series.

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Under the terms of the Open Government Licence and UK Government Licensing Framework, anyone wishing to use or re-use ONS material, whether commercially or privately, may do so freely without a specific application for a licence, subject to the conditions of the OGL and the Framework.

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Designation can be broadly interpreted to mean that the statistics:

meet identified user needs;

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